4 must-dos when going from single-owner LLC to multiple owners

February 15, 2026

By Nadia Cabrera-Mazzeo, Esq.

When you’re the single owner of an LLC and you bring in a partner or partners, there are a few legal updates you have to make to your business in order to maintain the full benefits of your LLC. You’ll need to:

You’ll need to:

1.  Get a new EIN
2.  Get a new operating agreement
3.  Update your Articles of Organization
4.  Update your insurance policies

1.  Why you need a new EIN

One of the benefits of an LLC is the flexibility over how it is taxed. LLCs can choose to be taxed as sole proprietorships/ partnerships, S corporations, and even C corporations. On the other hand, that means that “LLC” is not a standalone tax category recognized by the IRS. If you have a single-member LLC, you are a sole proprietor in the eyes of the IRS unless you elect to be taxed as an S corporation. If you have a multi-member LLC, you are a partnership in the eyes of the IRS (again, unless you make the S corp election). So if you go from a single-member LLC structure to a multi-member LLC structure, you are changing from a sole proprietor to a partnership in the eyes of the IRS. This kind of structural change requires a new EIN.

The same applies when you go from being taxed as a corporation to being taxed a sole proprietorship or partnership. You don’t need a new EIN when you elect to be taxed as a corporation or you change your business’s name or location

Here’s more information directly from the IRS.

2.  Why you need a new operating agreement

If you never had an operating agreement as a single-member LLC, now’s your opportunity to tick that box. Operating agreements are not legally required in New Mexico, but they are an essential rulebook for how a company is operated on the back-end. It covers things like:

yellow dot   Who owns what percentage of the business
yellow dot   How profits are paid out
yellow dot   How important business decisions are made/ voted on
yellow dot   What happens if an owner passes away or wants to leave the business

It’s important that all the owners are on the same page about what it means to own and run the business. An operating agreement is a legally binding contract between the owners. It’s a way to hold each other accountable if an owner goes rogue and violates the agreement you made.

If you have an operating agreement as a single-member LLC, you must update it when you bring on partners. An operating agreement for a single owner will not reflect the reality of a business owned by multiple people and will not set clear expectations or protections for all the owners.

3.  When you need to update your Articles of Organization

If your Articles of Organization (the document you get from the Secretary of State when you create/ register your LLC) say the LLC is a single-member LLC, then you will need to officially update them when you bring on partners. If you don’t know where your Articles are or what they say, here’s a video on how to request a copy from the NM Secretary of State. You’ll see the option for updating the Articles in that same menu for requesting a copy of them.

4.  Updating your insurance policies

If your Articles of Organization (the document you get from the Secretary of State when you create/ register your LLC) say the LLC is a single-member LLC, then you will need to officially update them when you bring on partners. If you don’t know where your Articles are or what they say, here’s a video on how to request a copy from the NM Secretary of State. You’ll see the option for updating the Articles in that same menu for requesting a copy of them.

Make sure you give it the background information needed for the contract to pass basic muster and be mindful about common missing sections. If you don’t see those sections in the AI draft, tell it to add those sections specifically. Remember that even a comprehensive first draft can be meaningfully improved by a trained professional. In short, if you want to try your hand at an AI-generated contract, be my guest—but then have me review it!

Law office of Nadia Cabrera-Mazzeo, Esq.

Small business and contracts lawyer

Based in Taos, serving clients throughout New Mexico

505 427 2025

nadia@honestcontracts.com

The information on this website is not legal advice and does not create an attorney-client relationship. The rates and fees listed on this website may not be the most up to date.